In a recent episode of *America’s Commercial Real Estate Show*, the show’s host welcomed Anthony DellaPelle, chair of The Counselors of Real Estate (CRE) and also a lawyer with the New Jersey based firm of McKirdy, Riskin, Olson & DellaPelle, to discuss the Top Ten Issues Affecting Real Estate for 2025. This annual report, developed by the CRE through extensive polling and discussions among its 1,000 industry advisors, provides a forward-looking analysis of critical trends shaping the market. The committee for development of this was led by Timothy H Savage, Clinical Assistant Professor at the NYU Schack Institute of Real Estate, and Maureen Ehrenberg, FRICS, CRE, co-founder and CEO of Blue Skyre IBE, a Colliers Strategic Partner based in Chicago. This discussion is national in scope, this portions may apply less to commercial real estate in the Miami area.
Key topics included, in reverse order of importance/impact:
10. Price Expectation Gaps: The ongoing disconnect between buyer and seller expectations has been narrowing as market conditions adjust to the end of ultra-low interest rates. Debt maturities and economic shifts may force sellers to lower their asking prices, creating buying opportunities.
9. Office Vacancies and Tax Impact: With national office vacancies hovering around 20%, the declining property values of office buildings threaten the tax base of local economies. DellaPelle stressed the importance of understanding how urban office vacancies can affect everything from municipal budgets to surrounding businesses.
8. Sustainability: The demand for environmentally friendly real estate continues to grow, but implementing sustainable practices can be costly. In some regions, government regulations are pushing the shift towards more energy-efficient buildings, and investors increasingly favor green-certified properties.
7. Artificial Intelligence: While AI’s full impact on the real estate industry is still evolving, early applications in areas like market pricing for multifamily properties show promise. However, the quality of data input remains critical—AI’s effectiveness depends on reliable, accurate information.
6. Housing Affordability: The nation remains short about 4.5 million housing units, particularly affecting low- and middle-income earners. Solving this crisis will require creative collaboration between the public and private sectors, with opportunities in micro-apartments, co-living spaces, and adaptive reuse projects.
5. Insurance Costs: With rising insurance premiums—driven by increasing natural disasters and economic pressures—property owners face growing operational challenges. DellaPelle emphasized the need for creative solutions within the insurance industry, as well as possible public sector interventions.
4. Geopolitical Conflicts: Global conflicts, such as the Russia-Ukraine war and tensions in the Middle East, have direct effects on U.S. real estate. These disruptions impact supply chains, shipping costs, and the broader economic environment, all of which trickle down to real estate markets.
3. Loan Maturities and Debt: A looming $2 trillion in commercial real estate loans set to mature over the next two years has raised concerns about how property owners will handle refinancing at higher interest rates. DellaPelle noted that many loans have been extended, but the long-term impact remains uncertain.
2. Cost of Financing: Although interest rates may eventually decrease, DellaPelle pointed out that borrowing costs are unlikely to return to the historic lows of recent years. Investors and developers will need to adapt to a more normalized rate environment.
1. Global and U.S. Elections: Political changes at both the national and local levels can significantly impact real estate markets, from potential shifts in tax policies (like the 1031 exchange) to rent control legislation. DellaPelle highlighted the importance of staying informed and engaging with policymakers on these issues.
The report emphasizes the interconnectedness of these factors, underscoring the importance of strategic foresight and adaptability in navigating the ever-changing real estate landscape. Whether dealing with environmental regulations, AI, or geopolitical risks, the next few years promise both challenges and opportunities for real estate professionals.